Error Analysis Lowell Corporation has used the accrual

basis of
Error Analysis Lowell Corporation has used the accrual basis of accounting for several years. A
review of the records, however, indicates that some expenses and revenues have been handled
on a cash basis because of errors made by an inexperienced bookkeeper. Income statements
prepared by the bookkeeper reported $29,000 net income for 2009 and $37,000 net income for
2010. Further examination of the records reveals that the following items were handled
improperly.1. Rent was received from a tenant in December 2009. The amount, $1,000, was
recorded as income at that time even though the rental pertained to 2010.2. Wages payable on
December 31 have been consistently omitted from the records of that date and have been
entered as expenses when paid in the following year. The amounts of the accruals recorded in
this manner were:December 31, 2008 $1,100December 31, 2009 1,200December 31, 2010
9403. Invoices for office supplies purchased have been charged to expense accounts when
received. Inventories of supplies on hand at the end of each year have been ignored, and no
entry has been made for them.December 31, 2008 $1,300December 31, 2009 940December
31, 2010 1,420Prepare a schedule that will show the corrected net income for the years 2009
and 2010. All items listed should be labeled clearly. (Ignore income tax considerations.)View
Solution:
Error Analysis Lowell Corporation has used the accrual basis of
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